New credit card holders are most of the time lost in the terms and concepts used in credit card transactions. Sometimes, this leads to confusion and eventual loss of good credit rating of an individual. Accordingly, the following are some of the basic terms used in transacting with the use of credit cards. Credit Limit:First, and probably one of the most important, is the term credit limit. It’s defined as the maximum amount of credit that the creditor, usually the bank, can extend to the borrower. This is usually dependent upon the financial status of an individual as declared in his application for a credit card. Billing Cycle:Another term is the billing cycle. This denotes a period of time between billings, usually a month. On the other hand, a bill statement is a list of purchases made using the credit card. APR:Meanwhile, the term annual percentage rate or APR is defined as the interest rate charged on unpaid balances the amount a customer will pay annually. You can figure your interest charges per day by taking your annual percentage rate and dividing this number by 365. Non-Revolving Credit:There is also called non-revolving credit. These are credits which cannot be used again after payment, such as a student loan. This term is also referred to as close-ended credit. This is the opposite of revolving credit, which can be repeatedly used after each payment. For additional information on credit cards or related topics please visit the website below:
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